Last updated on May 25th, 2022 at 09:52 am
UPDATE 5 November 2020: Chancellor Rishi Sunak confirmed that the CJRS will be extended until the end of March 2021 and that the Government will review the policy in January 2021.
UPDATE: Coronavirus Job Retention Scheme (“CJRS”) extended and the launch of the Job Support Scheme (“JSS”) postponed
The Government announced on 31 October 2020 that the CJRS will be extended by a further month and will remain open until December 2020 in order to provide additional support to employers through the second national lockdown in England which is due to commence on 5 November 2020. As a result, the start of the JSS has been delayed until the extended CJRS ends.
This announcement from the Government will be welcome news to employers across the country who persevere in their efforts to weather the storm and attempt to mitigate the negative impacts that both national and regional lockdowns and the pandemic generally continue to have on their businesses.
While the extended CJRS has been provisionally extended until December 2020 (according to the press release), the Government is already discussing the potential for the latest restrictions in England to be extended beyond four weeks. Therefore, a further extension to the CJRS under the same or lesser terms cannot be ruled out, and employers should therefore monitor this situation closely, be proactive rather than reactive and plan as much as possible as the second lockdown ensues.
Here is what you need to know about the extended CJRS:
- Throughout November 2020, the CJRS will remain open to employees which were on payroll as at 23:59 on 30 October 2020;
- Employers will be able to claim 80% of an employee’s wages, capped at £2,500 for hours not worked (i.e. as a result of a business closure meaning that employees cannot work);
- Both flexible and full furlough are permitted, and employers can choose to top up employees’ wages at their own discretion;
- Flexible furloughing is allowed which enables employees to work part of their usual hours where, for example, the latest restrictions have not resulted in complete business closure or employees are still required to perform safety and maintenance tasks during a closure;
- As flexible furlough is possible, employees may be placed on and off furlough and as such there is no requirement for employees to be working the same pattern each week;
- For hours worked, employers will pay their employees in line with their existing contractual / statutory minimum wage, as applicable;
- As per the earlier CJRS, during furloughed hours employees must do no work for the employer;
- Employers will be required to pay the national insurance and employer pension contributions on employees’ furlough pay, which is the only cost to employers for hours not worked, unless the employer decides to top up employees’ wages;
- The version of the CJRS which will be in place during November encompasses the benefits under the scheme available in August 2020 and is an increase on the 60% of wages an employer could claim during October 2020. However, unlike the previous position under the flexible furlough scheme, employers will be able to furlough employees for the first time in November, as long as they were on the payroll as at 23:59 on 30 October 2020;
- The extended CJRS will be open to all employers and operate as previously, with employers being paid upfront to cover wage costs. However, there will be a short period where the claims portal will need to be updated and employers will be paid in arrears for that period. Therefore, employers could face a short-term cash flow issue, which can be mitigated by applying for the Local Restrictions Support Grant worth up to £3,000 per month which is available for companies whose business premises are forced to close in England as a result of the new restrictions;
- Claims will need to be for a minimum seven consecutive calendar day period;
- Employers may need to enter into a further flexible furlough agreement if they wish to continue to claim for employees under the CJRS (although in some cases, a side letter confirming the extension of an employee’s previous flexible furlough agreement on the new terms may be sufficient);
- Employers who were intending to move their employees onto the JSS and have entered into agreements with employees to that effect will also need to consider revising the start date of that agreement by way of a side letter or a revised agreement;
- In a HMRC bulletin released on 2 November 2020, HMRC stated as follows: “If employees were on your payroll on 23 September 2020 (i.e. notified to HMRC on an RTI (Real Time Information) submission on or before 23 September) and were made redundant or stopped working for you afterwards, they can also qualify for the scheme if you re-employ them”;
- There is no requirement to have claimed under the earlier CJRS;
- As before, the Government expects publicly funded organisations not to use the CJRS;
- There is no requirement for an employee to work for a minimum number of their usual hours, although where flexible furlough is applied, employers cannot claim for employees’ wages for the time they spend working; and
- As previously, employees (or their representatives) must agree to any changes made to their employment contract to reflect their new working arrangements and must be notified in writing by the employer. This agreement must be retained for five years, made available to HMRC on request and a record kept of how many hours employees work, together with the usual hours they are not working.
The HM Treasury press release advises that further guidance on the extended CJRS will be published shortly. The third Treasury direction applied to the period 1 July to 31 October 2020. It will therefore either need to be amended to reflect the extension of the scheme, or a further Treasury direction will be required.
The prevailing view, based on the wording of the press release (i.e. that “all UK employers” can access the CJRS), is that the extension of the CJRS will apply to the whole of the UK. However, final confirmation in the forthcoming guidance is awaited on this point.
For further information and guidance on the CJRS, please consult our detailed blog post.